Hill v. Dillon

• Decision Date: 11 December 1913
• Parties: EDWARD C. HILL, Appellant, v. T. J. DILLON and R. M. BUSHMAN, Respondents
• Court: Missouri Court of Appeals

161 S.W. 881

176 Mo.App. 192

EDWARD C. HILL, Appellant, v. T. J. DILLON and R. M. BUSHMAN, Respondents

Court of Appeals of Missouri, Springfield

December 11, 1913

Appeal from Greene County Circuit Court.--Hon. Guy D. Kirby, Judge.

REVERSED AND REMANDED.

Edgar P. Mann and William B. Skinner for appellant.

(1) Representations which amount merely to an expression of opinion and which do not imply knowledge and about which men differ are not fraudulent, although not true and known to be so by the party making them and afford no relief against a contract. 1 Bigelow on Fraud, p. 473; Brown v. L. & Z Co., 194 Mo. 681; Cornwall v. Real Estate Co., 150 Mo. 377; Wilson v. Jackson, 167 Mo. 156; Harrison v. Walden, 89 Mo.App. 164; Nauman v Oberle, 90 Mo. 666; Cohn v. Reed, 18 Mo.App 115; Gordon v. Butler, 105 U.S. 553. (2) False representations of an employee or agent, as an inducement to contract cannot be relied upon as a defense thereto, unless the representations were within the scope of the employee or agent's authority and were made with the sanction of the principal, and agency must appear, before principal is bound. Rawling v. Bean, 80 Mo. 614; Crawford v Bank, 67 Mo.App. 39; Richardson v. Palmer, 36 Mo.App. 522; Ins. Co. v. Kuhlman, 6 Mo.App. 522. (3) Instructions not predicated on the evidence are erroneous. McCartney v. Fagain, 42 Mo.App. 619; McKeon v. Railroad, 42 Mo. 79; Campbell v. VanHouten, 44 Mo.App. 231; McAtee v. Vanlandingham, 75 Mo.App. 53. (4) The mere possession of a negotiable instrument indorsed in blank, imports prima facie that the holder acquired it bona fide, for value, in the usual course of business, before maturity and without any notice of any circumstances impeaching its validity. Daniel on Negotiable Instruments, par. 812; Johnson v. Murray, 72 Mo. 282; Keim v. Vette, 167 Mo. 399; R. S. 1909, sec. 10029. (5) If on the trial there is in the opinion of the court nothing to contradict the evidence offered to support a party's cause, such party is entitled to a peremptory instruction. Bank v. Hainlin, 67 Mo.App. 483; Wright v. Realty Co., 178 Mo. 80. (6) Fraud is an affirmative fact to be proved, and while it may be inferred from circumstance yet it can only be legitimately inferred from substantial and tangible facts in evidence, suspicion and conjecture is not enough to warrant a court in submitting the issue of fraud to a jury. Ridge v. Greenwell, 53 Mo.App. 479; Thrasher v. Greene County, 105 Mo. 244; Distilling Co. v. Lock, 59 Mo.App. 637.

J. B. McGuffin, George Pepperdine and H. H. Bloss for respondents.

(1) Representations of value to persons who are inexperienced and not in a situation to judge of the value, made by persons who are in a situation due to experience, to judge of the value of the property sold, where the buyer relies on such expressions of value and has not the means at hand to inform himself, constitute actionable fraud. Alston v. Loy, 172 F. 90; Cahn v. Read, 18 Mo.App. 130; Mining Co. v. Watrus, 61 F. 162; Lumber Co. v. Dent, 121 Mo.App. 108; Morley v. Hurrah, 167 Mo. 74; Tinker v. Kier, 195 Mo. 183, 94 S.W. 501; Hess v. Draffen & Co., 99 Mo.App. 580, 74 S.W. 440; Gottschalk v. Hirchner, 109 Mo. 184, 17 S.W. 905; Dun v. White, 63 Mo. 181; Cottrill v. Krum, 100 Mo. 405, 13 S.W. 753. (2) When persons interested either as confederates or as conspirators act jointly, the acts and declarations of each, said and done, in the accomplishment of the general purpose, are to be taken in account against the others. Shinebarger v. Shelton, 41 Mo.App. 147; Poe v. Stockton, 39 Mo.App. 550; Mosby v. McKee, Zook & Whitehead, 91 Mo.App. 500. (3) After the maker shows either fraud or failure of consideration in the execution of the note, it then devolves on the assignee of the note before maturity to show affirmatively that he procured said note for value, before maturity, without notice of either of such defenses. Hill v. Dillon, 151 Mo.App. 86; Jones v. Wilson, 140 Mo.App. 281; Stewart & Co. v. Andes, 110 Mo.App. 243; Jones v. Bank, 128 S.W. 829. (4) And after the assignee makes such proof the sufficiency thereof is on one of fact for the jury, as held in this case on the former appeal. (5) Where fraudulent intent is the gist of the inquiry, that the evidence should be allowed to take a wide range and the other transactions of the party accused of the fraudulent intent, not only contemporaneous with the transaction in controversy, but previous and subsequent to it, which have a natural tendency to explain the motives with which it may have been affected and which are not too remote and conjectural, should be gone into. Manheimer v. Harrington, 20 Mo.App. 301; McBeth v. Craddock, 28 Mo.App. 380.

A. E. SPENCER, Special Judge. Sturgis, J., and Robertson, P. J., concur. Farrington, J., not sitting.

OPINION

A. E. SPENCER, Special Judge.

This is the second appeal of this case. The opinion on the former appeal is reported in 151 Mo.App. 86, 131 S.W. 728. The action is on a negotiable promissory note, and brought by an endorsee against the makers. The petition is in the usual form. The answer consists, first, of a general denial; second, of an admission of the execution of the note and of the endorsement, with a specific denial that the plaintiff is a purchaser for value before maturity, it being alleged that the assignment of the note to plaintiff was without consideration and to enable the payee to recover the amount of the note and prevent defendants from setting up the defenses later mentioned; that the note is held in secret trust by plaintiff for the payee, who is charged to be the real party in interest. The charge that the assignment was colorable, and that plaintiff holds the note in secret trust for the payee, is not supported by any evidence. Third, it is alleged that the execution of the note was procured by certain fraudulent representations and acts by the payee, Hart, and others who are not named. These representations and acts are set out in detail. They are discussed in the former opinion and need not be repeated here. Fourth, the answer charges that the consideration of the note was certain mining stock in a corporation; that the value of the stock was dependent on the value of a mining lease belonging to the corporation and alleged to be its sole and only asset, and that the payee in the note, to induce the purchase of the stock by defendants, falsely and fraudulently represented that the stock was dividend paying stock and extremely valuable, when, in fact, the stock had no value at all and had never paid a cent of dividend, and the consideration for the giving of the note had utterly failed.

For reply, plaintiff alleges that he is the holder of the note in due course, stating the facts essential to this relation. The reply then states facts on which it is sought to base a plea of estoppel as against defendants as to the defenses set up in their answer. It was held in the former opinion that the matters pleaded and shown in evidence do not estop defendants from setting up fraud in the procurement of the note as a defense against payment. This ruling was correct, and it is not necessary to reiterate here the reasons therefor.

The opinion on the former appeal gives somewhat in detail the facts tending to sustain the answer that the execution of the note was procured by fraudulent representations and acts. Reference is made to that opinion for these facts. The evidence on this question was substantially the same at each trial. It was held on the former appeal that the evidence on this question was sufficient to entitle defendants to go to the jury on the question of the note having been procured by fraud. In this opinion we concur.

Appellant contends for the application in this case of the rule that the possession of a negotiable instrument endorsed in blank imports prima facie that the holder acquired it bona fide, for value, in the usual course of business, before maturity and without notice of any circumstances impeaching its validity; also, that plaintiff's evidence tended to prove this situation, and that as there was no evidence to the contrary, plaintiff was entitled to a peremptory instruction directing a verdict in his favor. In this connection, it is urged that the court erred in refusing instruction No. 4, asked by plaintiff, which is as follows:

"The court instructs the jury that the instrument sued on in this case is a negotiable promissory note and the defendants admit in their answer that they executed the same and that it has been assigned to the plaintiff, and, in law, it is presumed that such note was negotiated with plaintiff before maturity, for value, and without notice of any defense thereto."

The cases cited by appellant on this point arose before the enactment of our Negotiable Instruments Law, while this question must be determined by the provisions of that law. Section 10022, Revised Statutes of Missouri, 1909, defines a holder in due course as follows:

"A holder in due course is a holder who has taken the instrument under the following conditions: (1) That it is complete and regular upon its face; (2) that he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact; (3) that he took it in good faith and for value; (4) that at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it."

Section 10025 provides when the title of a person who negotiates an instrument is defective, and is as follows:

"The title of a person who negotiates an instrument is defective within the meaning of this chapter when he obtained the instrument, or any signature thereto, by fraud, duress or force and fear, or other...